by Kate Alfano, CMS Communications Coordinator

On Dec. 12, 2019, the Department of Health Care Policy and Financing (HCPF) released a comprehensive report, “Reducing Prescription Drug Costs in Colorado,” that outlines the primary drivers of prescription drug costs in Colorado and how the state of Colorado can influence these cost trends. HCPF stated in a news release that “left uninterrupted, the prescription drug cost trends will continue on an unsustainable, upward trajectory.”

“Prescription drug costs represent over 20 percent of premium dollars in the individual market where costs are especially high,” said Dave Downs, MD, FACP, chair of the CMS Work Group on Health Care Costs and Quality. “Drug costs are also the fastest rising component of health care costs. There is ample evidence that prescriptions are frequently not filled or are ‘rationed’ due to cost.”

“The legislature, administration, business and consumers are all focused on drug costs and there will be bills introduced into the legislature in the coming session to help address what has become a growing problem for our patients,” Downs continued. “This report is an excellent guide for those interested in policy and also for potential solutions that are likely to be proposed. For those interested in health policy as it relates to cost of care, it is a must-read. Of particular interest are the sections dealing with drug price transparency and the concept of a Prescription Drug Affordability Board for Colorado.”

The report identifies key primary cost drivers as the following:

  • Lack of transparency and pricing practices – ranging from pricing methodologies that are unrelated to research, development, manufacturing and distribution costs; to variation in pricing between dispensing settings.
  • Anticompetitive practices – such as patent policies and other practices that delay access to less expensive generic drugs.
  • Marketing and lobbying – this includes, but is not limited to, direct-to-consumer and direct-to-physician marketing that increases prices and results in increased utilization of higher-cost drugs.

The authors note in the report that specialty and branded drug costs grew significantly faster than inflation, approximately 28.5 percent and 5 percent per year, respectively, from 2012-2018.

According to HCPF, spending continues to shift from traditional to specialty medicines, which now account for $384 of the $895 per person per year spent on medicines nationally. In 2012-2018, Health First Colorado’s (Colorado Medicaid) prescription drug benefit costs rose 51 percent – an average of 8.5 percent each year – before manufacturer rebates. HCPF agrees with the federal CMS’s prediction that over the next decade, spending for prescription drugs will represent the fastest growth health category and will consistently outpace that of other health spending.

“HCPF’s prescription drug cost report is a good opportunity to address the rising cost of prescription drugs for Coloradans,” said CMS President-elect Sami Diab, MD. “Many patients are not able to afford their medications and this is a real issue that needs to be addressed. CMS will be engaged with HCPF to discuss policies and legislation that would reduce anti-competitive practices, allow consumers to benefit from drug rebates, and prevent delay strategies that block generic and biosimilars from arriving to the market. It is time to address practices that are harmful to consumers in order to protect Coloradans.”

Read the full report at www.colorado.gov/hcpf.


Categories: Communications, Colorado Medicine, Resources, Health System Reform